Brand protection in the face of counterfeit and diversion challenges
When you start a company, your goal is to create a popular and profitable product. You are decidedly not thinking about the fact that your product will get counterfeited and sent to the gray market when it does get popular. And trust me, that will happen.
When I met with the American skincare brand OZNaturals® they were riding the wave of rapid growth and impressive success. The company was launched in 2013 by CEO Angela Irish with the goal of creating a range of clean, efficacious, and affordable skincare products, using the highest quality ingredients. The brand had quickly evolved from selling only on Amazon to their product being available in 82 countries, even becoming the number one skincare choice in Saudi Arabia.
But an issue was causing a major headache: counterfeiting and diversion. Of course, this would be a challenge for any brand; but for OZNaturals whose success was built on the quality of their ingredients, this was a consumer protection and brand issue.
The global cost of product counterfeiting and piracy is projected to reach nearly $3 trillion by 2022. The cost for OZNaturals was consumers unwittingly using products which did not meet the high standards of the brand and could ultimately cause damage to the skin. This risk to consumers—from basic ineffectiveness of counterfeits through to actual physical injury—was something OZNaturals had to address immediately.
By the time they started their conversation with me and the team at Systech, OZNaturals had swung into action to resolve the problem. They had trialled several additive technologies including holograms. But nothing truly worked and so eventually they turned to serializing all their products and tracking who they were sent to. Serialization is a great tool for supply chain excellence, delivering value in traceability. But it is a physical, printed layer, and counterfeiters responded by copying serial numbers.
Fortunately, we were able to offer a solution which is non-additive, covert and completely impossible to replicate. To achieve this, we use the existing QR or barcode on a product’s current packaging. Our innovative technology turns that printed code into a unique, digital identifier, or e-Fingerprint®. With the use of a simple smartphone app, field inspectors and partners can instantly authenticate a product anywhere in the supply chain and know if a legitimate product is where it should be and not diverted.
OZNaturals began the integration of our technology at the end of 2020, starting with their top selling skincare products, including OZNaturals Vitamin C Facial Serum and OZNaturals Hyaluronic Acid Facial Serum. It made swift improvements which included the detection of hundreds of counterfeit products in the Middle East, which they had confiscated. OZNaturals is now implementing the solution across all their products.
A top priority at OZNaturals has always been protecting consumers and brand integrity. With our solution we have been able to achieve that by resolving both counterfeit and diversion challenges.
We hope you’ve found these tips helpful. If you have any questions or comments, please get in touch!